I started out with the following setup (See Below) in FCP but when I went to DVD Studio it did not work. However I believe I have figured it out. Please scroll down to see if my new settings are correct. I Believe that the most significant error was to select the Anamorphic setting in either the Audio/Video Settings dialog box and/or selecting the Anamorpic option directly in in the sequence settings menu. With the new settings I am able to export to DVD Studio and maintain the "16:9" look.

If you have time could you explain what true 16:9 is on video and what does the XL1s do to achieve that look?

David I just burned a dvd and played it on a dvd player to a standard television.

The footaged is letterboxed as expected and proportially correct. I did not use the anamorphic settings in FCP at all eventhough my original video footage was shot using the xl1s in "16:9" mode. Since i am playing it on a standard 4:3 TV it's not a problem. What would happen if I played the dvd on a wide screen TV?